Open Access and the Tragedy of the Commons

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The environment is not only the source of raw materials, but is also a sink for the wastes generated as a result of exploitation of those same resources. As the economy continues to expand and industrial output grows, we are generating more and more hazardous wastes and toxic chemicals which will eventually end up in the air, in the water supply, and on land. Because society requires many services and products, it is understandable that a certain amount of pollution must be tolerated. The question is where the balance lies and how much longer we can exploit our natural resources before the costs associated with environmental degradation outweigh the benefits of increasing production and material wealth. Economists differ in their approach to reducing environmental pollution but, at the same time, assure that society as a whole benefits from proposed cleanup strategies. Most economists measure the cost/benefit ratio of the environmental protection in monetary terms; there are some, however, who are not willing to put a figure on the natural capital and the ecological systems that support life. The dilemma is that, although sources are owned privately (either by state or private enterprises), the same entities have free access to the sink (atmosphere) which is owned by the public as a whole.

In this chapter we will discuss various methodologies that are used by traditional and ecological economists to measure the cost of polluting the environment in both monetary and non-monetary terms and the role the government plays in regulating pollution (a). In particular we will address pollution generated from fossil combustion and the costs and benefits of environmental cleanup.

One of the major problems with environmental cleanup is that most natural capitals are not (and cannot be) privately owned. In economic terms, this is called the open access problem, or the tragedy of commons (1). When a resource (such as a grazing land or a lake) is accessible to all, there is little incentive for individuals to protect it. A cattle herder or a fisherman will rationally argue that if they do not exploit the land for more grazing, or use the lake for more fishing, somebody else will. It is therefore logical to exploit the land or to overfish the lake to its maximum limit and reap the benefits before somebody else does. Same can be said of natural sinks like the atmosphere. A factory owner or a coal company have little incentive to bear the high cost of cleaning the air even though their children and families living nearby may have to breathe the same air. In a way, in absence of environmental regulations, they reap the full benefit of avoiding the cleanup cost, although they have to pay only a fraction of the cost that air pollution will bring to the entire community.



(1) Hardin, G., “The Tragedy of Commons,” Science, vol. 168, December 13, 1968.

(2) Toossi Reza, "Energy and the Environment:Sources, technologies, and impacts", Verve Publishers, 2005

Additional Information

(a) For more detailed information, please refer to the list of books given at the end of this chapter.

Further Reading

Chapman, D., Environmental Economics: Theory, Application, and Policy,” Addison-Wiley, 2000.

Goodstein, E. S., Economics and the Environment, 4th Ed., John Wiley & Sons, 2002.

Siebert, H., Economics of the Environment: Theory and Policy, Springer Verlog, 2004.

Dauvergne, P., Handbook of Global Environmental Politics, Edward Elgar Publishing, 2005.

Journal of Environmental Economics and Management (JEEM), the journal of Association of Environmental and Resource Economics.

Ecological Economics – Direct Science Elsevier Publishing Company, the journal of the International Society for Ecological Economics (ISEE).

Environmental Economics and Policy Studies – Published by Springer-Verlog, New York is the official journal of the Society for Environmental Economics and Policy Studies.

External Links

US Agency for International Development (

National Center for Environmental Economics (

United Nations Development Program (

United Nations Environment Programme (

Intergovernmental Panel on Climate Change (

World Resource Institute (

Union of Concerned Scientists (